Home > Fox Revives Falsehood That Public Sector Pensions Are Bankrupting Governments

Fox Revives Falsehood That Public Sector Pensions Are Bankrupting Governments

Fox News has seized on Stockton, California's announcement that it will file for bankruptcy in order to blame state and local governments' budget problems on public sector pension obligations. In fact, the budget problems facing these governments are the result of the dramatic drop in revenue after the recession, not pensions.

Varney: "The Writing Is On The Wall For Other Cities And States ... Pressed By Their Pension Obligations." Varney also claimed on Fox & Friends that the Stockton bankruptcy could portend the bankruptcies of other city and state governments due to pension obligations: "The writing is on the wall for other cities and states which are in the same situation -- that is, pressed by their pension obligations. This could push other cities over the brink into bankruptcy." [Fox News, Fox & Friends, 6/27/12[1], via Media Matters]

But Public Worker Pensions Are Not The Cause Of Governments' Fiscal Problems

CBPP: State "Budget Gaps Result Principally From Weak Tax Collection" Because Of "The Largest Collapse In State Revenues On Record" Due To The Recession. According to a Center on Budget and Policy Priorities (CBPP) report titled "States Continue to Feel Recession's Impact," states' budget gaps are "still very large by historical standards" because of the recession, which "caused the largest collapse in state revenues on record." [Center on Budget and Policy Priorities, 6/27/12[2]]

CBPP: "Long-Term Pension Shortfalls Are Not The Cause" Of Current State Government Fiscal Problems. The CBPP stated: "State economies and budgets continue to struggle because of shrunken revenues and rising needs. The long-term pension shortfalls are not the cause of the current state fiscal problems, and addressing them need not overwhelm state and local budgets now or reduce states' ability to recruit and retain a high-quality workforce." [Center on Budget and Policy Priorities, 5/12/11[3]]

Center For Retirement Research: Pension Plans Accounted "For Only 3.8 Percent Of State And Local Spending." A 2010 study by Boston College's Center for Retirement Research found that in 2008, pensions accounted "for only 3.8 percent of state and local spending."

The Center for Retirement Research's reported included the following graph:

McClatchy: "There's Simply No Evidence That State Pensions Are The Current Burden To Public Finances That Their Critics Claim." McClatchy Newspapers, citing the Center for Retirement Research, reported that "there's simply no evidence that state pensions are the current burden to public finances that their critics claim." [McClatchy Newspapers, 3/6/11[5]]

Krugman: Claim That Pension Obligations Would "Bankrupt All State And Local Governments" Is "Mainly A Creation Of Right-Wing Propaganda." In June 2011, Nobel-prize winning economist and New York Times columnist Paul Krugman noted that the "financial position of public employee pension funds [is] much better" than it was since the financial crisis. He continued: "But that crushing pension deficit, which everyone knew was going to bankrupt all state and local governments? Mainly a creation of right-wing propaganda. Are you surprised?" [The New York Times, The Conscience of a Liberal, 6/10/11[6]]

CBPP: Claims That Pensions "May Cause Localities To Declare Bankruptcy ... Overstate The Fiscal Problem" And "Fail To Acknowledge That Severe Problems Are Concentrated In" Just A Few States. A CBPP report on misunderstandings regarding public pensions explained that claims that pension obligations are unmanageable and will result in bankruptcy "overstate the fiscal problem" and "fail to acknowledge that severe problems are concentrated in a small number of states."[Center on Budget and Policy Priorities, 1/20/11[7]]

To see more about how the recession, not public sector pensions, caused current budget problems, click here[8]

To see how right-wing media previously falsely blamed state budget problems on public workers' collective bargaining rights, click here[9]